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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: eabDad who wrote (33795)	10/12/1998 11:49:00 AM
From: HB	Read Replies (1) \| Respond to of 132070

Shane, eaB re equipment: Certainly lots of companies are at cycle low valuations (e.g. ASYT is below cash, and only a tad over 0.6 book (was cheaper yesterday!). One more thing that keeps these from going lower is that there is very recent memory among some of having made obscene amounts of money buying at these sorts of valuations recently. (I didn't make obscene amounts; my sense of decency, or rather my lack of belief that last fall's recovery was going to last, made me dump about halfway between trough and peak). You may see lower valuations on the large-caps, but for the small caps to go much further down (except in specific instances where a company is in danger of going under, and there will be some... PMAT now= TRKN is a casualty I recall from the last trough, luckily didn't buy it but did research it at one point) will require a lot of people believing that "this cycle is different" on the downside: that die shrinks, etc.. have reduced the amount of equipment needed to build the necessary fabs to satisfy chip demand, that semiconductors are becoming a commodity and a slow-growing, mature sector of the world economy, etc... I personally think there is some truth to this, but that eventually various internet, wireless, digital TV, etc.. applications will lead to enough demand for chips advanced enough that there will be a reasonable upcycle, maybe not starting next year but sometime, for the equip makers, hence I've been putting some money, cautiously, in some of what I consider the better small-cap ones trading at the valuations eaB mentioned. I dont't think one should expect the insanely high valuations of last fall to return even then (again because of recent volatility, people remember how those who bought last fall got burned), but who knows. I'm sure I'll sell too soon again. For really cheap valuations, wait until a significant segment of analysts and the public are going "It's not just a cycle, it's a huge, permanent change in the chip equipment business as we know it!" We may not get to that point, although I think it's more likely than not. Buying AMAT if it breaks further is probably very smart, I'm waiting to do that. LRCX might be very interesting since it's large-cap and cheap, but I would want to check very carefully into how badly AMAT is hurting it first. A look at the performance of both over the last few years will illustrate why AMAT often trades at a premium to Lam.